Price of oil tumbles as Iran, Trump declare Strait of Hormuz ‘completely open’

Washington: The price of oil has tumbled more than 10 per cent after Iran declared the Strait of Hormuz has fully reopened, at least for the duration of its current ceasefire with the US and Israel.

US President Donald Trump called it a “great and brilliant day for the world”, and said Iran had vowed never to close the crucial shipping passage again. But that claim – and others – have been denied by senior figures in Tehran.

In a series of social media posts on Friday (US Time), Trump foreshadowed a deal with Iran to end the war, including the US taking Iran’s highly enriched uranium, and said he had banned Israel from bombing Lebanon any further.

“The U.S.A. will get all Nuclear ‘Dust’, created by our great B2 Bombers – No money will exchange hands in any way, shape, or form,” he posted on Truth Social.

“This deal is in no way subject to Lebanon, either, but the USA will, separately, work with Lebanon, and deal with the Hezboolah [sic] situation in an appropriate manner. Israel will not be bombing Lebanon any longer. They are PROHIBITED from doing so by the U.S.A. Enough is enough!!!”

In an all-caps post, Trump said the US naval blockade of the Strait of Hormuz – which has applied against ships leaving or entering Iranian ports since Tuesday – would remain in force until the deal with Iran was complete.

“THIS PROCESS SHOULD GO VERY QUICKLY IN THAT MOST OF THE POINTS ARE ALREADY NEGOTIATED,” he said.

Trump thanked mediators Pakistan, and US Gulf allies Saudi Arabia, Qatar and the United Arab Emirates, while refreshing his criticism of “useless” NATO allies, whom he accused of failing to help.

It came after Iranian Foreign Minister Abbas Araghchi declared that passage for all commercial vessels through the strait would be “completely open for the remaining period of the ceasefire”, along a co-ordinated route.

As the Strait of Hormuz tentatively reopened, the traffic through the waterway included a cruise ship. Celestyal Discovery, a 680-cabin cruise ship flagged with Malta, left Dubai on Friday after being there for 47 days, according to vessel tracker Marine Traffic Watch. It was headed to Oman, with one catch: there are no guests on board.

However, Iran’s powerful parliamentary speaker Mohammad Bagher Ghalibaf said all of Trump’s claims were “false”, and that if the US blockade continues, “the Strait of Hormuz will not remain open”.

Two semiofficial news agencies in Iran have also cast doubt on Araghchi’s comments.

Fars news agency, which is reportedly close to the Iranian Revolutionary Guard, condemned a “strange silence from the Supreme National Security Council and the negotiating team,” in published posts.

Meanwhile, the Mehr news agency also said that the reported decision to reopen the strategic waterway needed “clarification” and “requires the (Supreme) Leader’s approval”.

A spokesman for Iran’s foreign ministry, Esmail Baghaei, told state television the country’s enriched uranium “is not going to be transferred anywhere”.

China, which is Iran’s biggest trading partner, has said it’s open to taking possession or downgrading some 440 kilograms of the enriched uranium, a diplomat familiar with Beijing’s thinking on the matter told The Associated Press.

In 2015, under the landmark Joint Comprehensive Plan for Action, signed between Iran and the P5+1 (the United States, United Kingdom, France, China, Russia and Germany) plus the European Union, Iran shipped about 11,000 kg of low-enriched uranium to Russia to meet an essential requirement of that deal. Trump pulled the United States out of the agreement in 2018, having repeatedly called it “the worst deal ever made”.

Nonetheless, oil prices fell more than 10 per cent on Friday (New York time), and share markets rallied, with the Dow Jones more than 1000 points (2.2 per cent) higher at lunchtime trade.

Ship movement through the Strait of Hormuz remained confined to corridors requiring approval hours after full reopening of the strategic waterway was announced, according to tracking firm Kpler.

“Markets have responded with cautious optimism” to the reopening, said Kpler, adding that “full normalisation in trade and confidence is likely to take months, not weeks”.

A day earlier, Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun agreed to a 10-day ceasefire after conversations with Trump.

Israel’s ongoing strikes against Hezbollah targets in Lebanon had been a major threat to the broader ceasefire, with Iranian negotiators demanding that Lebanon be included.

It was not clear whether Hezbollah would recognise a truce it played no role in negotiating, and which will leave Israeli troops occupying a stretch of southern Lebanon. However, the ceasefire appeared to hold in its first 24 hours.

British Prime Minister Keir Starmer had just concluded a meeting with French President Emmanuel Macron and dozens of other world leaders – including Australia’s Prime Minister, Anthony Albanese – when Iran announced the strait would fully reopen.

Albanese welcomed the news the strait would reopen. “We want to see this hold,” he said, adding: “Australia stands ready to support efforts to restore stability and security in the Strait of Hormuz.”

Will Todman, a senior fellow in the Middle East program at the Centre for Strategic and International Studies, said the US decision to blockade ships transiting Iranian ports “completely changed the balance of power” in negotiations between the US and Iran.

“Until that point, I think the Iranians really felt it was in their interests to continue [delaying],” he said. “They weren’t in a hurry to negotiate, and they felt that the longer negotiations went on, the greater their leverage would be because of the pain they were inflicting on the global economy.”

Todman noted Trump had again leant on Netanyahu to agree to a ceasefire – as he did with the war in Gaza last year – despite it not being in the Israeli prime minister’s political interests.

“Most Israelis don’t support it, and he has not defeated Hezbollah. Now it looks like he’s going to be more constrained going forward.”

Meanwhile, in Beirut, barrages of gunshots rang out across the city as residents fired into the air just after midnight to celebrate the beginning of the truce, and displaced families began moving toward southern Lebanon and Beirut’s southern suburbs despite warnings by officials not to attempt to return to their homes until it became clear whether the ceasefire would hold.

A spokesperson for the UN peacekeepers in southern Lebanon said that they had not observed any airstrikes, but accused the Israeli military of violating airspace and artillery shelling in southern Lebanon.

The Israeli military did not immediately comment. According to the agreement shared by the US State Department, Israel can act in self-defence against imminent attacks but cannot carry out offensive operations against southern Lebanon.

Since February 28, the fighting has killed at least 3000 people in Iran, more than 2100 in Lebanon, 23 in Israel and more than a dozen in Gulf Arab states. Thirteen US service members have also been killed.

With AP

Get a note directly from our foreign correspondents on what’s making headlines around the world. Sign up for our weekly What in the World newsletter.